the Board of Directors ( Vorstand ) of a joint- stock company ( AG ) are not subject to instructions by the General Meeting or the Supervisory Board in their normal course of business. The most significant advantage of the Aktiengesellschaft ( AG ) compared to the GmbH is the easier transferability of company shares and their tradability on the stock market. 2.3 Entities under European Law (SE) The European Company or Societas Europea ( SE ), the European Cooperative Society ( SCE ) and the European Economic Interest Grouping ( EEIG ) are also business entities which may be incorporated under Austrian law but are seldom used. 2.4 General Partnership (OG) The general partnership or Offene Gesellschaft ( OG ) is an association of at least two physical persons or legal entities. Each of the partners in a general partnership bears personal, unlimited, direct and joint liability for all the partnership’s obligations. The liability towards creditors can’t be limited. The general partnership may be established for any purpose permitted by law and may therefore undertake all commercial, industrial, professional and agricultural activities (exceptions: activities such as insurance businesses, pension funds and employee provision funds). Unlike limited companies, the Offene Gesellschaft ( OG ) may be set up without any initial capital. It comes into legal existence upon its registration in the Commercial Register ( Firmenbuch ).

2.5 Limited Partnership (KG) 2.5.1 General information

The limited partnership or Kommandit- gesellschaft ( KG ) is a partnership entity consisting of at least two physical persons or legal entities, similar to the Offene Gesellschaft ( OG ). The major difference towards the OG is the liability of its members, because not all the partners bear full and unlimited liability for the partnership’s obligations. At least one partner (“general partner”) is required to bear unlimited liability for the partnership’s obligations while the remaining partner/s (“limited partner”) is/are only liable up to the amount of their capital contributions registered in the Commercial Register ( Firmenbuch ). 2.5.2 GmbH & Co KG The GmbH & Co KG is a hybrid form of the limited liability company ( GmbH ) and the limited partnership ( KG ) in which the sole personally liable general partner is a limited liability company ( GmbH ). In a typical setup the shareholders of the GmbH are also limited partners of the KG . Considering how the liability of the partners is modified in case of the GmbH & Co KG the Austrian legislation tends – due to the strict rules on creditor protection – to apply the same legal framework to the GmbH & Co KG as to the limited liability company ( GmbH ). Therefore, the GmbH & Co KG is sometimes referred to as “hidden limited company”. The reasons for establishing this special form of a limited partnership are motivated mainly by the advantages of an indirect limitation of liability and tax benefits.

ILN Corporate Group – Establishing a Business Entity Series

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